Slicon Towers, Plot no: 3 & 3, Flat No - 101, Silicon Valley, Image Garden Lane, Madhapur, Hyderabad, 500081 040-35859159

Why the Construction Cost is Rising?

Housing prices in India are expected to rise as developers face a sharp increase in the cost of raw materials such as steel, cement and other items, eating into their already thin margins.

The realty sector had been witnessing a rebound after a two-year slump caused by the Covid-19 pandemic, but the ongoing Russia-Ukraine war and the global supply chain disruptions threaten to upset this nascent recovery.

The current daily increment in gasoline and diesel prices by Indian oil retailers is also expected to push up costs.

The Maharashtra chapter of the association, which covers two prime real estate markets – Mumbai and Pune – has urged the federal and state government to provide relief by reducing stamp duty and goods and services tax rates.

The association said it would not advise members to stop ongoing projects, but if the price rises continue then builders would have no option but to suspend construction and defer the purchase of raw materials.

The New Delhi chapter of the association said developers have decided to stop buying raw materials.

There has been a 30-100% rise in the prices of steel, cement, aluminum and PVC in the last year and this has resulted in a more than 40% increase in raw material prices. The recent increases in fuel prices are expected to further increase raw material costs.

Meanwhile, cement manufacturers are expected to further increase their costs next month as international petroleum coke and coal prices have risen 70-80% in a month.

Market observers claim steel prices will remain high as the prices of raw materials such as coking coal and iron ore have gone up sharply after the Ukraine crisis.

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